ROCKMAN wrote:Darian - "You can temporarily increase demand for a short while by borrowing against the future, but it is unsustainable." And thus the perpetual problem of using short term trends (a year or 3) to predict long term trends (5 to 10 years). The lag times are just to difficult to factor into the dynamics.

The financial crisis was on 2008. Some of these articles are from 7 years later. 10 years later, and has debt suddenly stopped rapidly rising?

The word is by 2020s demand might start outpacing supply. And this is assuming an everything as usual scenario. We're on increasing anthropogenic climate change + potential world war scenario. A natural disaster or war could interrupt global supply. Some say some of the world's top billionaires' positions appear to show they are betting on a near term global financial crisis arising.

Darian - "The word is by 2020s demand might start outpacing supply." Demand (except during one specific dynamic) cannot exceed supply. Nor can supply exceed demand. Unless you have a very different definition of "demand"...such as demand = what consumers WANT to buy and not what they can afford to buy.

Supply will always equal demand. EXCEPT if oil prices become so low that there are many more buyers with the funds to acquire oil then there is oil production. Which cannot persist for very long because producers would use such demand to increase prices eliminating those potential buyers unable to afford the more expensive oil.

When oil fell to $29/bbl there were buyers for every bbl being sold. A lot of buyers which is why prices increased immediately after that low point was reached. Just as there were buyers for every bbl being sold when oil reached $146/bbl. Not as many buyers which is why prices decreased immediately after that high point was reached.

ROCKMAN wrote:Darian - "The word is by 2020s demand might start outpacing supply." Demand (except during one specific dynamic) cannot exceed supply. Nor can supply exceed demand. Unless you have a very different definition of "demand"...such as demand = what consumers WANT to buy and not what they can afford to buy.

Supply will always equal demand. EXCEPT if oil prices become so low that there are many more buyers with the funds to acquire oil then there is oil production. Which cannot persist for very long because producers would use such demand to increase prices eliminating those potential buyers unable to afford the more expensive oil.

When oil fell to $29/bbl there were buyers for every bbl being sold. A lot of buyers which is why prices increased immediately after that low point was reached. Just as there were buyers for every bbl being sold when oil reached $146/bbl. Not as many buyers which is why prices decreased immediately after that high point was reached.

Supply might equal demand always in those matching graphs were supply meet demands and price can change to allow supply to increase almost divorced from the physical world.

But if price increases cannot be sustained, so as to increase supply, what will happen is that the demand level of a healthy growing economy won't be met, and you will have so-called demand destruction affecting the health of the economy.

All I see is growth of oil production growth in 2016, and accelerating growth in 2017, and 2018 in the Permian.

No doubt the growth story in the Permian from 2016 to 2018 has been great. The big unknown here is if the oil production rates in the Permian will continue to grow and grow until 2030, as the EIA projects, or if the Permian will peak and oil production will stop growing sooner then the boosters predict, as has happened at virtually every other tight shale oil are in the USA.

By the way--- its not just Al Berman who is pessimistic----he's just the most recent oil analyst to cast doubt on the idea that the Permian basin oil production can keep growing until 2030. There are a number of other oil analysts who have said that Permian oil production won't keep growing until 2030. The alternative view is that the Permian basin will peak as soon as 2020 or perhaps by the early 2020s. For instance heres a link to a story from 2017:

Load of BS. Immediately after writing his “death of the Bakken” paper the DMR pointed out that he was not using either the most recent or correct information.

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In responding to Berman's analysis for Forbes, state officials found inaccuracies in his assessment of well performance, economics, gas/oil ratios (GOR) and water/oil ratios (WOR), a DMR spokesperson said. "We want to put what we feel is the most accurate information out there for decision makers," she said.

A combination of steadily improving well performance and continuing reductions in breakeven costs has pointed to the Bakken continuing to evolve as a more robust U.S. shale play as opposed to it facing the "beginning of the end," Helms said, adding that Kringstad's approach to measuring well performance year over year using "raw data" is superior to the approach used by Berman.Kringstad's well performance data shows that since 2011, performance has improved steadily on a per-well basis through 2016. "This well performance data is critical for the midstream operators' to develop plans for new pipeline and processing infrastructure," he said. Midstream operators keep close tabs on both oil and natural gas performance."Natural gas has been even more pronounced year over year in terms of improvement in how wells are performing," Kringstad said. "The big question is can the industry continue this march forward?" His data so far show that it can.With activity in the past two years being concentrated on the Bakken's core including McKenzie County, Kringstad examined seven fields in the northern end of that county, and found well performance was about 25% higher last year than it was a few years earlier. "When you are talking multiple wells, high-performing wells in that area, the 25% increase means a substantial additional amount of gas needs to be moved out of the region," he said.

rockdoc123 wrote: the Bakken was ... 1 MMb/d and now it is at 1.2 MMb/d.

The Bakken hit a peak of 1.24 MMb/d in 2014. Its been below the 2014 peak for four years now.

Yes, production from the Bakken is going up again, and may exceed 1.24 MMb/d at some point in 2018 thanks to longer wells and new completion techniques that weren't being used four years ago, but I don't think anyone is predicting that Bakken oil production will continue to grow and grow and grow for years into the future.

Lets face facts here. Oil production at the Bakken just isn't going to grow much anymore.

And just as the growth story stopped at the Bakken years ago, oil production growth is going to stop in the Permian Basin as well, i.e. The permian is going to peak.

Production currently has recovered from the drop which accompanied a falling oil price. What is different now? The increase from 2016 to recent has been accomplished with much fewer wells. In 2014 when production was only slightly higher than current there was close to 200 rigs active in the play and now there are only 60. Those rigs have been concentrating on the sweet spots as they provided the best economics in a low price environment. With rising prices tier 2 and 3 locations are now being targeted by small companies and with more rigs active production will increase further. Improved technology makes those targets much more attractive than in the recent past. This is shown by the EIA data which shows average daily production from new wells in the Bakken in 2014 was around 250 bpd whereas in 2018 it is sitting around 1500 bpd. The growth story is far from over in fact if the well count were to rise to previous levels, production would almost certainly be much higher.

And obviously, there is still a lot of life left in the Bakken, especially so as technology continues to improve and ultimate recovery follows in hand. Leigh Price estimated the Bakken contained about 413 billion barrels of oil in place. Published recovery factor estimates range from as low as 1% to a high of 50% which means there is a huge range of potential URR. The USGS estimate of technically recoverable resources was somewhere around 7 billion barrels and by some estimates, about 2 billion have been recovered to date. This leaves a lot of room for continued production from the Bakken.

The USGS estimate of technically recoverable resources was somewhere around 7 billion barrels and by some estimates, about 2 billion have been recovered to date. This leaves a lot of room for continued production from the Bakken.

There are some problems with your math.

The Bakken is now producing about 1.2 MMb/d. That comes to about 0.44 billion bbls per year. If there are five billion bbls left in the Bakken field as you suggest, then the resource will be completely depleted in ca. 12 years. However, since the USGS estimate you refer to was actually made in 2013, there have actually already been 5 years of production since 2013, amounting to perhaps 1.5 billion barrels, and production really got going back in ca. 2008, and another ca. 1.5 billion bbls was produced from 2008-2013, the amount of remaining recoverable oil is probably closer to 4 billion barrels, which could be produced in ca. 9 years at current rates.

And, since the oil companies tend to go after the sweet spots first (ie. the most productive areas), chances are production rates will decline as the years march on and the Bakken field approaches the near of its productive life and all that is left is poorer quality parts of the Bakken field. Basically we've already seen 11 years of production fro the Bakken, and its got maybe 9-10 years left---and much of the best areas have already been drilled.

Given those facts, I don't think the case for extended long term growth in Bakken oil production rates is very good, actually.

he Bakken is now producing about 1.2 MMb/d. That comes to about 0.44 billion bbls per year. If there are five billion bbls left in the Bakken field as you suggest, then the resource will be completely depleted in ca. 12 years. However, since the USGS estimate you refer to was actually made in 2013, there have actually already been 5 years of production since 2013, amounting to perhaps 1.5 billion barrels, and production really got going back in ca. 2008, and another ca. 1.5 billion bbls was produced from 2008-2013, the amount of remaining recoverable oil is probably closer to 4 billion barrels, which could be produced in ca. 9 years at current rates.

well, first of all, you need to actually figure out your own math. Production has been down significantly since 2014 due to the oil price crash...surprise.And as I said the recoverable reserve is at a debate. It is as low as 1% of OOIP and as high as 50% of OOIP. The USGS estimate amounts to 1% of OOIP..that is ridiculous in terms of recovery factor.And when we are talking about recovery from shales and other tight formations it is all about technology. Getting from 1% to 10% is a huge bit of reserve add. Your view or remaining recoverable is all based on an assessment of OOIP that is low and recovery factor that doesn't take into account the evolving technology.

It's difficult to see how that little burp ruined the shale bidness? But we were right . . . . only $100/barrel makes you sharks wealthy sprinkling eau d'bakken on your sorry selves. But it leaves a bad smell in the rest of America

more idiocy...Who said it ruined shale extraction? Nobody. What it did was slow down operations in most areas so they focused on only the most productive areas, hence well count dropping from a high over 200 to the tens.And as has been pointed out here numerous times the break even prices for most of the basins is well below the current price, $100/bbl is not needed by any stretch of the imagination.

As to leaving a bad smell perhaps it's time you stopped using anything that was made with or requires the use of hydrocarbons. That would include not only your vehicles but your house, your clothes, most of the food you eat. I'm sure you won't miss all of that.

The Permian Basin is nearing its peak. The best land has been drilled, and oilcos can't get enough sand to frack all the wells and there aren't enough truck drivers to move the sand into the well sites anyway. The WSJ now reports that the oilcos are starting to look again at second tier shale oil plays in Colorado and Oklahoma now that the Permian Basin is getting close to hitting its limit.

Using DPR from EIA, we see that the Permian represented 55% of the LTO growth in 2017, and 65% since January 2018 (still estimates).

The Bakken (1.201 Mb/d in Apr 2018) recovered from its low production point in 2016 (0.995 Mb/d), but still has not reach its peak of December 2014 (1.263 Mb/d).

Eagle Ford recovered also (1.328 Mb/d in Apr. 2018 vs 1.166 Mb/d in dec 2016), but also is far away from its peak (1.718 Mb/d in March 2015).

So, once again, outside the Permian, oil production is not exactly soaring. But there is growth anyway, and including all the plays show impressive production gains. This is probably due to techniques we already discussed here.

The EIA forecast quite a growth for 2018 (avg 10.72 Mb/d) and for 2019 (avg 11.27 Mb/d). Also, most of the global growth rely on the US, which rely mostly on the Permian play currently. If, for whatever reason, the Permian play doesn't meet the expectations we set on it, the oil market will become really tight. And it's anyway due to happen at some point...

So, once again, outside the Permian, oil production is not exactly soaring. But there is growth anyway, and including all the plays show impressive production gains. This is probably due to techniques we already discussed here.

improved technology has certainly helped change some tier 2 acreage into tier 1 but the most important driver over the past months has been oil price. Acreage in the Bakken, Eagle Ford etc that was considered marginally economic when prices were ~$50 are now being pursued, especially so by the smaller companies who can squeeze that extra dollar out through efficiencies.

People forget how depressed the market was for a couple of years following the price drop. As I pointed out above the number of rigs operating in the Bakken dropped from a high just over 200 to a low in and around 40 and has recently recovered to around 60. That recovery will continue as long as prices stay within the range they are currently.

tita wrote: most of the global growth rely on the US, which rely mostly on the Permian play currently. If, for whatever reason, the Permian play doesn't meet the expectations we set on it, the oil market will become really tight. And it's anyway due to happen at some point...

+1

Exactly right.

And that is precisely why I started this thread.

When we hit peak Permian we will be getting very close to hitting global Peak Oil.

And Peak Permian isn't very far away....almost certainly we'll hit Peak Permian in the 2020s, most likely in the early 2020s, and some say as soon as 2020.

Plantagenet wrote:When we hit peak Permian we will be getting very close to hitting global Peak Oil.

And we know this how? Or do you mean THIS peak, in the ebb and flow of oil production?

There are other places to produce lots of US fracked oil, especially at current or higher prices. If it's clear the Permian has peaked, attention will turn more to those other sources, in the name of profits. Exploration looks like a much better risk as prices rise as well.

There are also lots of places ex-US where oil fracking may hold promise, at the right price. Thus far, environmental, cultural, legal, and funding issues have prevented much development of those resources. The recent oil glut didn't help.

But if we get oil prices over $100, I think that picture will change a lot in time. Lots of countries would like the revenue from the taxes on such production will generate, and of course, oil companies would like the profits from such production.

No question the Permian will peak and decline at some point. But I question how that defines being very close to hitting global peak oil. The world is a big place. There's still lots of oil. Production technologies continue to advance.

Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.

Every oil region in the world (save a few) are well past peak. Among the OPEC-14 members, only Iraq, UAE and possibly SA are not past peak. These are the preeminent oil exporting countries.

Algeria in 2005Angola in 2009Ecuador nowEquatorial Guinea in 2005Gabon in 1997Iran in 1970Kuwait in 1970Libya in 1970Nigeria in 2009Qatar in 2010Venezula in 1998

All the major oil regions (with the possible exception of Russia but can we trust them to say?) have peaked. OPEC, North Sea, North Slope, Bakken, Deepwater GOM, offshore GOM, Brazil deep water ETC ETC ETC. All peak or peaking right now. Peak is in the rear view mirror. I said it first. I said it here. Congrats for being a member of a very select historical group.

You can tell your grandchildren all about it. If you haven't eaten them already

And yet, the world liquid fuels production currently is running about 20% higher than that and forecast to continue to increase.

Outcast_Searcher wrote:No question the Permian will peak and decline at some point. But I question how that defines being very close to hitting global peak oil. The world is a big place. There's still lots of oil. Production technologies continue to advance.

Could you be more specific? Or do you just have a gut feeling that there has to be lots more oil out there somewhere that everybody else has missed and there's an invention about to be invented that will show us where the oil is and how to get it?

If you know of some new technology or some new kind of oil play that will allow global oil production to continue to rise when all the currently known conventional and shale oil plays have peaked, then would you be so good as to please tell me what it is....? Thx.

Objects don't care where oil comes from for obvious reasons, but those who pay do. That's because the deeper or dirtier the oil, the more processing needed, and that means higher costs. If costs are too high, then some goods and services are sacrificed for those that are needed more, and that affects economies that require increasing sales of goods and services.

Given that, the best-case scenario will involve every society returning to basic needs until the global population levels off. That's best-case because it assumes that the effects of environmental damage plus global warming will be minimized, that the global population won't rise further, that everyone (that means including the rich) will easily agree to much simpler lives (e.g., no more Internet, cars, etc.), that all military forces will stand down, etc.